Sharon M. Bertelsen (#9759)
BALLARD SPAHR LLP
201 South Main Street, Suite 800
Salt Lake City, Utah 84111-2221
Telephone: (801) 531-3000
Facsimile: (801) 531-3001
John M. Beahn
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111
Telephone: (202) 371-7000
Facsimile: (202) 393-5760
BEFORE THE PUBLIC SERVICE COMMISSION OF UTAH
In the Matter of Virgin Mobile USA, L.P.
Petition for Limited Designation as an
Eligible Telecommunications Carrier
I.
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Docket No. 10-2521-01
Post-Hearing Brief of
Virgin Mobile USA, L.P.
INTRODUCTION
Virgin Mobile USA, L.P. (“Virgin Mobile”), a wholly owned subsidiary of Sprint Nextel
Corporation (“Sprint Nextel”), seeks designation as an Eligible Telecommunications Carrier
(“ETC”) in the State of Utah, pursuant to Section 214(e)(1) of the Communications Act of 1934,
as amended (“Act”), for the limited purpose of offering prepaid wireless services supported by
the federal Universal Service Fund’s (“USF”) Lifeline program, under the trade name
“Assurance Wireless Brought to You by Virgin Mobile.” Virgin Mobile has affirmatively
established through testimony and other evidence that it satisfies all of the federal and state
requirements for ETC designation, and that designation of Virgin Mobile to provide Lifeline
service in Utah would promote the public interest by providing qualifying Utah customers with
lower prices and higher quality wireless services. For many low-income residents of Utah,
wireless service remains unattainable because of financial constraints, and Virgin Mobile’s
prepaid Lifeline service is ideally suited to provide these consumers with reliable wireless
services. As an ETC, Virgin Mobile would provide affordable, and even free, services to
qualifying consumers, the intended beneficiaries of USF support. Having established that it
satisfies the requirements for designation as an ETC, and since such designation would advance
the public interest, Virgin Mobile respectfully requests that the Utah Public Service Commission
(the “Commission”) expeditiously approve Virgin Mobile’s petition for ETC designation.
II.
BACKGROUND
A.
Procedural Background
On April 12, 2010, Virgin Mobile filed its Petition for Limited Designation as an ETC
with the Commission. The Division of Public Utilities (“Division”), the Office of Consumer
Services (“OCS”), and other interested parties, including the Utah Rural Telecom Association
(“URTA”), Salt Lake Community Action Program (“SLCAP”), Advocates for Universal Access,
and TracFone Wireless, Inc., have participated in this proceeding by offering testimony or
comments.
On March 8, 2011, Hearing Officer David R. Clark presided over a hearing
(“Hearing”) attended by Virgin Mobile, the Division, OCS, URTA, and SLCAP. Virgin Mobile
presented Ms. Elaine M. Divelbliss as its witness, and during the Hearing, she was examined by
representatives of the other parties. At the end of the Hearing, Mr. Clark provided each of the
parties an opportunity to file a post-hearing brief.
This brief describes Virgin Mobile’s
qualifications for designation as an ETC and supports grant of its petition.
B.
Virgin Mobile’s Previous ETC Designations
Virgin Mobile has been designated as an ETC for purposes of offering Lifeline services
in twenty-four (24) states. The service has been exceptionally well received by low-income
residents, demonstrating a clear demand for prepaid wireless Lifeline.
2
Virgin Mobile was originally designated as an ETC for the purposes of offering Lifeline
services by the Federal Communications Commission (“FCC”) in March 2009. That designation
authorized Virgin Mobile as an ETC in the states of New York, North Carolina, Tennessee and
Virginia.1 The FCC determined that approving Virgin Mobile as an ETC to offer Lifeline
service was in the public interest, finding that Virgin Mobile would offer Lifeline-eligible
consumers a choice of providers for accessing wireless telecommunications services and would
further the goal of expanding participation in the Lifeline program.2
At the time the FCC originally designated Virgin Mobile as an ETC, prior to its
acquisition by Sprint Nextel, Virgin Mobile was operating as a mobile virtual network operator
that did not own any network facilities. In recognition of this fact, Virgin Mobile also sought
forbearance from enforcement of the Section 214(e)(1)(A) facilities-based requirements for ETC
designation. The FCC granted Virgin Mobile’s request and conditioned the grant on Virgin
Mobile’s compliance with certain requirements aimed at enhancing Lifeline customers’ access to
public safety services and preventing misuse of the Lifeline offering. 3 In October 2009, the FCC
approved Virgin Mobile’s proposed plan to implement each of the imposed conditions for the
first four states in which it received ETC designation.4
In November 2009, Virgin Mobile was acquired by Sprint Nextel. In December 2010,
the FCC designated Virgin Mobile as an ETC in the states of Alabama, Connecticut, District of
1
2
3
4
See Exhibit 1, Direct Testimony of Elaine Divelbliss at p. 9, lines 3-5; Federal-State Joint Board on Universal
Service; In the Matter of Virgin Mobile USA, L.P. Petition for Forbearance from 47 U.S.C. § 214(e)(1)(A);
Petitions for Designation as an Eligible Telecommunications Carrier in the States of New York, North
Carolina, Pennsylvania, Tennessee and Virginia, Order, FCC 09-18 (rel. Mar. 5, 2009) (“Order”).
Id. at ¶¶ 21, 30.
Id. at ¶ 12.
See Federal-State Joint Board on Universal Service; In the Matter of Virgin Mobile USA, L.P. Petition for
Forbearance from 47 U.S.C. § 214(e)(1)(A); Petitions for Designation as an Eligible Telecommunications
Carrier in the States of New York, North Carolina, Tennessee and Virginia, Order, DA 09-2344 (rel. Oct. 29,
2009) (“October 2009 Order”).
3
Columbia, Delaware and New Hampshire, and held that subsequent to the acquisition by Sprint
Nextel, Virgin Mobile is considered a facilities-based carrier.5
Virgin Mobile has received ETC designations from state public utility commissions in the
following states: Michigan, Louisiana, West Virginia, Texas, Maryland, Florida, New Jersey,6
Indiana, Mississippi, Washington, Pennsylvania, South Carolina, Iowa, Arkansas 7 and Georgia.8
These designations were made without reliance on the FCC’s Order.
III.
VIRGIN MOBILE SATISFIES ALL REQUIREMENTS FOR ETC DESIGNATION
Section 214(e)(1) of the Act sets forth the requirements for ETC designation.
Specifically, applicants for ETC designation must be common carriers that will offer all of the
services supported by federal universal service support mechanisms, using their own facilities or
a combination of their own facilities and the resale of other carriers’ services. 9 Applicants must
also commit to advertise the availability and rates of such services using media of general
distribution.10 Section 214(e)(2) of the Act provides that State commissions shall have authority
to designate as ETCs common carriers that meet the requirements of Section 214(e)(1). Virgin
Mobile has demonstrated that it satisfies each of the above requirements.
A.
Virgin Mobile is a Common Carrier
The Act defines a common carrier as “any person engaged as a common carrier for hire,
in interstate or foreign communication by wire or radio . . . .”11 It is well established that
5
6
7
8
9
10
11
See Federal-State Joint Board on Universal Service; In the Matter of Virgin Mobile USA, L.P. Petitions for
Designation as an Eligible Telecommunications Carrier in the States of Alabama, Connecticut, District of
Columbia, Delaware and New Hampshire, Order, DA 10-2433 (rel. Dec. 29, 2010) (“2010 Order”).
See Exhibit 1, Direct Testimony of Elaine Divelbliss, and attached state commission decisions.
See Testimony of Elaine Divelbliss on behalf of Virgin Mobile on March 8, 2011, Tr. at p. 9, lines 14-17.
See Petition of Virgin Mobile USA, L.P. for Limited Designation as an Eligible Telecommunications Carrier,
Order, Georgia Public Service Commission Docket No. 31297 (Mar. 17, 2011), granted after the Hearing.
See 47 U.S.C. § 214(e)(1)(A).
See 47 U.S.C. § 214(e)(1)(B); 47 C.F.R. § 54.201(d).
See 47 U.S.C. § 153(10).
4
providers of mobile wireless services are common carriers. Since Virgin Mobile is a provider of
wireless telecommunications services, it is a common carrier eligible for designation as an ETC.
B.
Virgin Mobile Will Provide the Supported Services
As a wholly owned subsidiary of Sprint Nextel, Virgin Mobile is capable of providing all
of the services and functionalities supported by the universal service program over an existing
network infrastructure throughout its service territory in Utah.12 Specifically, Virgin Mobile
provides all of the following services and functionalities as set forth in Section 54.101:
(1) Voice Grade Access to the Public Switched Network. Virgin Mobile demonstrated
that it provides voice grade access to the public switched network and offers its services at the
minimum bandwidth for voice grade access as required by the FCC’s regulations.13
(2) Local Usage. An applicant for ETC designation is required to demonstrate that it
offers a local usage plan that is “comparable” to the plan offered by the incumbent local
exchange carrier (“ILEC”) in the relevant service territory.14 The FCC has indicated that review
of local usage plans must examine all aspects of the individual plan, including the nature of the
supported service, the size of the local calling area, the inclusion of additional services (e.g.,
caller I.D., etc.) and the amount of local usage.15 The amount of local usage that has been
deemed to satisfy the local usage requirement has varied.16 Virgin Mobile’s proposed Lifeline
offering fully complies with the local usage requirements established by the FCC. Not only will
Virgin Mobile’s Lifeline plan be comparable to the underlying ILECs’ plans, but the advantages
of its service offering will exceed the ILECs’ plans in several respects.
12
13
14
15
16
See 47 C.F.R. § 54.101.
See Virgin Mobile ETC Petition at p. 10, citing 47 C.F.R. § 54.101(a)(1).
See 47 C.F.R. § 54.202(a)(4).
See Federal-State Joint Board on Universal Service, Report and Order, 20 FCC Rcd 6371, ¶¶ 32-34 (2005).
See, e.g., Petitions for Designation as an Eligible Telecommunications Carrier: Farmers Cellular Telephone,
Inc., 18 FCC Rcd 3848, 3852 (2003); Pine Belt Cellular, Inc. and Pine Belt PCS, Inc., 17 FCC Rcd 9589
(2002); Western Wireless Corp., 16 FCC Rcd 48, 52 (2000).
5
Virgin Mobile will offer its Lifeline customers a free Assurance Wireless branded E911compliant handset of the same type available to Virgin Mobile non-Lifeline customers and 250
free minutes per month. Unlike relatively small ILEC local calling areas, Virgin Mobile Lifeline
customers can place calls nationwide because it does not constrict customers’ use by imposing a
local calling area requirement. Virgin Mobile Lifeline customers will also have access to a
variety of other features at no additional charge, including voice mail, call waiting, caller I.D.,
and E911 capabilities, and customers may purchase additional minutes at favorable rates.17
Unlike an ILEC Lifeline plan that is tied to a landline phone, Virgin Mobile’s Lifeline plan has
the immeasurable benefit of mobility as a key feature.
(3) Dual Tone Multi-Frequency Signaling or its Functional Equivalent. Virgin Mobile
provides DTMF signaling to expedite the transmission of call set up and call detail information
throughout its network and its wireless handsets offered for sale are DTMF-capable.18
(4) Single-Party Service or its Functional Equivalent. Virgin Mobile provides the
wireless functional equivalent of single-party service to customers for the duration of each call.19
(5) Access to emergency services. Virgin Mobile provides nationwide access to 911
emergency services for all of its customers and complies with the FCC’s regulations governing
E911 compatible handset deployment and availability.20
17
18
19
20
See Testimony of Elaine Divelbliss, Tr. at p. 12, line 8 to p. 13, line 14. Additional minutes may be purchased
for $0.10 per minute, and text messages for $0.10 per text. Customers may also choose from two higher-usage
offers: for $5, receive an additional 250 minutes each month, for a total of 500 minutes, or for $20, receive an
additional 750 minutes each month and 1,000 text messages, for a total of 1,000 voice minutes and 1,000 text
messages. Calls to 911 and customer service have always been free of charge and without using minutes.
See ETC Petition at p. 11.
See ETC Petition at p. 12. Only one party is served by a subscriber loop or access line during a single call.
See ETC Petition at p. 12. Virgin Mobile will remain functional in emergency situations, relying on Sprint
Nextel’s established internal programs, policies and teams to analyze and respond to emergencies, as required
by 47 C.F.R. § 54.202(a)(2). The network is monitored continually, it incorporates a degree of redundancy, and
it has reasonable back-up power to significantly reduce instances of loss of service.
6
(6) Access to operator services. Virgin Mobile provides all of its customers with access
to operator services.
(7) Access to interexchange services. Virgin Mobile’s Assurance Wireless service
provides customers with 250 minutes of any-distance telephony. Minutes for local or domestic
long distance services are not billed separately or at different rates.
(8) Access to directory assistance. All Virgin Mobile customers are able to dial “411” to
reach directory assistance services from their wireless handsets.
(9) Toll limitation. Virgin Mobile’s minutes are not charged separately for local or
domestic long distance services. Although international calling does involve additional “toll”
expenses, customers must authorize access for such services, for which additional charges apply.
The FCC determined that the pre-paid nature of Virgin Mobile’s service mitigates concerns that
low-income customers will incur significant “toll” charges and thereby risk disconnection.21
Based upon the record in this proceeding, Virgin Mobile has demonstrated, as it has for
the other jurisdictions, that it will make these services and functionalities available on a timely
basis to qualifying Utah consumers in its service area, satisfy applicable consumer protection
standards, and maintain exceptional service quality over Sprint Nextel’s nationwide network.22
C.
Advertising of Supported Services
Virgin Mobile has demonstrated that it will advertise the availability of its Assurance
Wireless services described above using media of general distribution sufficient to meet the
advertising requirements.23 This will include advertising through newspapers, radio, television,
direct mail, and the Internet. In this proceeding, Virgin Mobile provided descriptions and
21
22
23
See Order at ¶ 34; 2010 Order at n. 33. “Toll limitation” refers to the ability of customers to block outgoing
long distance calls or specify a toll usage limit, to prevent significant long distance charges.
See, e.g., Testimony of Elaine Divelbliss, Tr. at p. 15, lines 18-25 (launching service on a timely basis); Tr. at p.
91, lines 18-22 (protecting consumer privacy); and ETC Petition at p. 16 (complying with Consumer Code).
See 47 U.S.C. § 214(e)(1)(B); 47 C.F.R. § 54.201. See ETC Petition at p. 14.
7
samples of advertising to promote the availability of its Lifeline offerings to qualifying
customers throughout Utah. In response to requests from interested parties, Virgin Mobile is
committed to working cooperatively with them to develop Utah-specific information materials to
explain eligibility requirements and service offerings to consumers.
D.
Service Territory, State USF Contributions, 911 and Other Surcharges
Virgin Mobile is seeking designation for its entire Utah service territory, as defined in its
Petition which includes a list of wire centers for which it seeks designation.24 Because Virgin
Mobile is applying for ETC designation in areas served by rural telephone companies, the
Commission must make a public interest determination under Section 214(e)(2) of the Act. As
part of that analysis, interested parties at the Hearing raised the issue of whether the Commission
should require all ETCs to collect and remit certain public interest surcharges as a condition of
granting them ETC status. On March 9, 2011, the Commission issued a decision which held that
an ETC must submit appropriate state USF surcharges as a condition of its ETC status.
However, the Commission held that it lacks jurisdiction to determine whether ETCs are subject
to the 911 surcharge, poison control surcharge, and other public interest program surcharges.25
Although Virgin Mobile is not seeking distribution from the state USF, Virgin Mobile
has been contributing to the state USF pursuant to Utah Code Ann. § 54-8b-15, and will continue
to do so in a manner approved by the Commission.26 If Virgin Mobile determines that it wishes
to receive state USF for Lifeline services in the future, it will file a new application requesting
24
25
26
See ETC Petition at p. 5 and Exhibit 2.
See Petition of TracFone Wireless, Inc. for Designation as an Eligible Telecommunications Carrier, Docket
No. 09-2511-01, Order on Reconsideration (Mar. 9, 2011).
See ETC Petition at p. 6; Testimony of Elaine Divelbliss, Tr. at p. 14, line 21 to p. 15, line 17. Virgin Mobile
has been contributing to the state USF based upon revenues of prepaid wireless services and due to prior
overpayments, it has been given a credit. Once the credit is exhausted, Virgin Mobile intends to recommence
payments to the state USF. See Petition of TracFone Wireless, Inc. for Designation as an Eligible
Telecommunications Carrier, Docket No. 09-2511-01, Order on Reconsideration (Mar. 9, 2011).
8
Commission authority to receive such support. Virgin Mobile currently submits the E911 fees,
and does not submit the poison control surcharge or other public interest program surcharges.27
E.
Eligibility for Lifeline Service
Utah Administrative Code Rules R746-341-3 and 4 govern the requirements for initial
and continuing eligibility for Lifeline service, the process and the cost to be determined by the
Commission in Docket No. 10-2528-01, Resolution of Certain Issues Related to the Designation
of a Common Carrier as an Eligible Telecommunications Carrier. Virgin Mobile is committed
to working cooperatively with the Commission to establish a system for verifying eligibility of
Lifeline applicants and implementing procedures that fully comply with Utah law.28
IV.
DESIGNATION OF VIRGIN MOBILE AS AN ETC IS IN THE PUBLIC INTEREST
The Communications Act, as amended by the Telecommunications Act of 1996, seeks
“to secure lower prices and higher quality services for American telecommunications consumers
and encourage the rapid deployment of new telecommunications technologies” to all citizens,
regardless of geographic location or income.29 Designation of Virgin Mobile as an ETC in Utah
will further this goal by providing Lifeline-eligible consumers with the advantages of Virgin
Mobile’s high quality telecommunications services at lower prices.30 According to the FCC,
Virgin Mobile’s Lifeline service provides “a variety of benefits to Lifeline-eligible consumers
including increased consumer choice, high-quality service offerings, and mobility.”31
Lower-income consumers are underserved in the competitive wireless market, and often
lack the vibrant wireless telephony choices available to most consumers. Increasing competition
27
28
29
30
31
See Testimony of Elaine Divelbliss, Tr. at p. 15, lines 5-7; p. 23, lines 10-22.
See Testimony of Elaine Divelbliss, Tr. at p. 17, lines 4-19.
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56.
As evidence of its commitment to high-quality service, it has complied with the CTIA Consumer Code for
Wireless Service since its inception and will continue to comply once designated. See Petition at p. 16.
Compliance with this Consumer Code also satisfies its obligations under 47 C.F.R. § 54.202(a)(3).
Order at ¶ 38; see also 2010 Order at ¶ 19.
9
in the Lifeline market increases pressure on carriers to provide service offerings tailored to the
needs of consumers, and represents significant progress towards ensuring that Lifeline eligible
consumers are able to share in the benefits associated with access to wireless services. Studies
suggest that many low-income consumers intermittently discontinue service because of
economic constraints. Virgin Mobile, if authorized to offer discounted Lifeline services in Utah,
will help to ensure that low-income consumers are able to afford wireless services on a
consistent and uninterrupted basis. Designating Virgin Mobile as an ETC in Utah will expand
the availability of affordable services and expand participation of qualifying consumers in the
Lifeline program, and is consistent with the public interest, convenience and necessity.
V.
CONCLUSION
As established on the record developed in this Docket, Virgin Mobile satisfies the federal
and state requirements for designation as an ETC in Utah for the limited purpose of offering
prepaid wireless services supported by the federal USF Lifeline program. Virgin Mobile stands
ready to provide services to qualifying customers shortly after receipt of its designation. Its entry
into the market for Lifeline services will increase competitive choice for Lifeline customers,
make available high-quality, low-cost service on Sprint Nextel’s nationwide network, and
therefore is decidedly in the public interest. For all of the reasons stated herein and in its ETC
Petition, Virgin Mobile respectfully requests that the Commission expeditiously designate Virgin
Mobile as an ETC in Utah exclusively for the purpose of participating in the Lifeline program.
Respectfully submitted,
Sharon M. Bertelsen
John M. Beahn
Counsel to Virgin Mobile USA, L.P.
Dated: April 7, 2011
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CERTIFICATE OF SERVICE
I certify that on April 7, 2011, I caused to be served Virgin Mobile USA, L.P.’s PostHearing Brief upon the following persons via electronic mail to the e-mail addresses listed
below, and via hand delivery as indicated:
Via Hand Delivery:
Via Hand Delivery:
Julie P. Orchard
Utah Public Service Commission
Heber M. Wells Building, 4th Floor
160 East 300 South
Paul H. Proctor
Assistant Attorney General
Heber M. Wells Building, 5th Floor
160 East 300 South
Salt Lake City, UT 84111
Salt Lake City, UT 84111
Via Hand Delivery:
Via Hand Delivery:
Patricia E. Schmid
Assistant Attorney General
Heber M. Wells Building, 5th Floor
160 East 300 South
Salt Lake City, UT 84111
Michele Beck
Cheryl Murray
Office of Consumer Services
Heber M. Wells Building, 4th Floor
160 East 300 South
Salt Lake City, UT 84111
Via Hand Delivery:
Salt Lake Community Action Program:
William Duncan
Casey J. Coleman
Utah Division of Public Utilities
Heber M. Wells Building, 4th Floor
160 East 300 South
Salt Lake City, UT 84111
Sonya L. Martinez
Betsy Wolf
smartinez@slcap.org
bwolf@slcap.org
Utah Rural Telecom Association:
Stephen Mecham sfmecham@cnmlaw.com
TracFone Wireless:
Advocates for Universal Access, LLC:
Mitchell F. Brecher
brecherm@gtlaw.com
Gary A. Dodge
gdodge@hjdlaw.com
Sheila Stickel sheila@advocatesua.com
/s/ Sharon M. Bertelsen
11